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Native Americans lived in the Charleston area for thousands of years before Europeans arrived. With the great tallgrass prairie to the west, beech-maple forests to the east, and the Embarras River and Wabash Rivers between, the Charleston area provided semi-nomadic Native Americans access to a variety of resources. Indians may have deliberately set the "wildfires" which maintained the local mosaic of prairie and oak–hickory forest. Streams with names like Indian Creek and Kickapoo Creek mark the sites of former Native settlements. One village is said to have been located south of Fox Ridge State Park near a deposit of flint.[citation needed]

The early history of European settlement in the area was marked by uneasy co-existence between Native Americans and European settlers. Some settlers lived peacefully with the natives. But in the 1810s and 1820s, after Native Americans allegedly harassed surveying crews, an escalating series of poorly documented skirmishes occurred between Native Americans, settlers, and militias known as the Illinois Rangers. Two pitched battles (complete with cannon on one side) occurred just south of Charleston along "the hills of the Embarrass," near the entrance to modern Lake Charleston park. These conflicts did not slow European settlement. Native American history in Coles County effectively ended when all natives were expelled by law from Illinois after the 1832 Black Hawk War. With the grudging exception of Indian wives, the last natives were driven out by the 1840s.[3]

First settled by Benjamin Parker in 1826, it was named for Charles Morton, its first postmaster.[4] The city was established in 1831, but not incorporated until 1865. When Abraham Lincoln's father moved to a farm on Goosenest Prairie south of Charleston in 1831, Lincoln helped him move, then left to start his own homestead at New Salem in Sangamon County. Lincoln was a frequent visitor to the Charleston area, though he likely spent more time at the Coles County courthouse than at the home of his father and stepmother. One of the famous Lincoln-Douglas debates was held in Charleston on September 18, 1858, and is now the site of the Coles County fairgrounds and a small museum.[5][6] Lincoln's last visit was in 1859, when the future President visited his stepmother and his father's grave.

Although Illinois was a solidly pro-Union, anti-slavery state, Coles County was settled by many Southerners with pro-slavery sentiments. In 1847, the county was divided when prominent local citizens offered refuge to a family of escaped slaves brought from Kentucky by Gen. Robert Matson. Abe Lincoln, by then a young railroad lawyer, appeared in the Coles County courthouse to argue for the return of the escaped slaves under the Fugitive Slave Act in a case known as Matson v. Ashmore. As in the rest of the nation, this long-simmering debate finally broke out into violence during the American Civil War. On March 28, 1864 a riot—or perhaps a small battle—erupted in downtown Charleston when armed Confederate sympathizers known as Copperheads arrived in town to attack half-drunk Union soldiers preparing to return to their regiment. Newspaper accounts[7] at the time said the Copperheads stated intention was to burn the town and "cut out the hearts of the '[damned] abolitionists.'" Even the county sheriff is alleged to have fired on the soldiers. By the time the Charleston Riot had ended, nine were dead and twelve had been wounded, mostly Copperheads.

In 1895, the Eastern Illinois State Normal School was established in Charleston, which later became Eastern Illinois University. This led to lasting resentment in nearby Mattoon, which had originally led the campaign to locate the proposed teaching school in Coles County. A Mattoon newspaper printed a special edition announcing the decision with the derisive headline "Catfish Town Gets It."

According to the 2010 census, the city has a total area of 9.63 square miles (24.9 km2), of which 8.92 square miles (23.1 km2) (or 92.63%) is land and 0.71 square miles (1.8 km2) (or 7.37%) is water.[9]

There were 7,972 households out of which 20.2% had children under the age of 18 living with them, 33.9% were married couples living together, 7.3% had a female householder with no husband present, and 56.6% were non-families. 34.6% of all households were made up of individuals and 9.5% had someone living alone who was 65 years of age or older. The average household size was 1.75 and the average family size was 2.44.

In the city the population was spread out with 9.8% under the age of 18, 44.1% from 18 to 24, 18.7% from 25 to 44, 13.7% from 45 to 64, and 7.9% who were 65 years of age or older. The median age was 21.9 years. For every 100 females there were 86.9 males. For every 100 females age 18 and over, there were 84.5 males.

The median income for a household in the city was $21,849, and the median income for a family was $49,625. Males had a median income of $30,906 versus $21,822 for females. The per capita income for the city was $15, 544. About 17.4% of families and 41.1% of the population were below the poverty line, including 8.7% of those under age 18 and 11.8% of those age 65 or over.

These figures may be somewhat skewed as 10,000 residents of Charleston are students at Eastern Illinois University, many of whom have their primary place of residence in other cities though they spend nine months of the year in Charleston.

Modern Charleston is home to Eastern Illinois University, which employs almost 2,000 full-time faculty and staff and has roughly 12,000 undergraduate and graduate students. Additionally, Eastern Illinois hosts the Illinois High School Association's Girls Badminton, Journalism, and Girls and Boys Track and Field State Finals.

The establishment of an enterprise zone on the northern edge of Charleston has helped attract some manufacturing and industrial jobs.

The first Jimmy John's Gourmet Sandwich Shop was in Charleston. It was founded by Jimmy John Liautaud in 1983.[11] The original building still stands near the corner of Fourth Street and Lincoln Avenue in Charleston.[12]